UK jobless rate has dropped to 4.2%, but growth in regular pay slows to 5.4%
The slowdown in pay growth in April to June is a “big win” for the Bank of England, says Thomas Pugh, economist at leading audit, tax and consulting firm RSM UK.
Pugh says the Bank’s monetary policy committee (MPC) will welcome the slowdown in wage growth in the private sector [workers may not agree, of course!].
Regular private sector pay growth has dropped from 5.6% to 5.2% in June, that’s only a fraction above the MPC forecast of 5.1%. Wage growth should continue to trend down over the rest of this year as 2% inflation is factored into pay settlements.
“If wage growth does continue to fall over the rest of this year, it would give the MPC ample cover to cut rates again towards the end of the year, probably in November, and then be more aggressive in its rate cutting cycle in 2025, so we currently have four cuts pencilled in for next year.
“Having reached its lowest rate in almost three years in July, August saw inflation nudge up again slightly. While this is noticeable following 17 straight months of falling rates, it actually marks a return to the average levels seen in the five years before the start of the cost of living crisis.
“With this kind of pricing spread, shoppers will find that the type of product they’re putting in their baskets will really dictate how much they pay.”
